Use your counterclaim to challenge a statutory demand
When the debt cuts both ways
A statutory demand can feel one-sided, especially when the other company still owes your business money. In that situation, the issue is not just what you owe them. The law also lets a company raise a genuine offsetting claim, including a counterclaim, set-off or cross-demand, when responding to a demand. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
For a busy director, the practical problem is speed. A company may apply to set aside the demand, but that application must be made within 21 days after service, and the supporting affidavit must be filed and served inside that window. Miss the deadline and the pressure shifts sharply against you. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Work out the counterclaim properly
Start by calculating the amount your company says the creditor owes. Separate the figure into clear items, such as unpaid progress claims, credits, retention, variation work, or other amounts you can actually prove. The Court looks at a genuine claim, not a rough objection or a hopeful estimate. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Then ask whether the claim is strong enough to matter in law, not just commercially. Section 459H requires the Court to calculate the substantiated amount of the demand after taking any offsetting claim into account. If the substantiated amount falls below the statutory minimum, the demand must be set aside. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Source: Official guidance
Gather the proof before the deadline bites
Paper wins or loses this kind of dispute. Pull together the contract, invoices, payment schedule, emails, variations, delivery dockets, defect notices, and any correspondence showing that the creditor accepted work, promised payment, or acknowledged money still owing. ASIC also notes the importance of checking the company’s registered office details and current register information when legal documents are in play. ([asic.gov.au](https://www.asic.gov.au/about-asic/contact-us/reporting-misconduct-to-asic/disputes-about-company-addresses-and-company-mail?utm_source=openai))
Do not leave the evidence as loose commentary. The claim needs to be stated clearly enough that a court can understand what the offsetting claim is, how it arises, and why it reduces the demand. If the papers are vague, the claim may not carry enough weight to shift the result. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Explain the claim clearly in your affidavit
Your affidavit is not the place for noise. It should set out the facts that support the counterclaim, the amounts involved, and the documents that prove each part. The Court guide on statutory demands confirms that an application to set aside the demand must be supported by affidavit material filed and served in time. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Keep the explanation direct. Say who owes what, why the amount is owed, and how that figure changes the debt in the demand. If there is also a genuine dispute about the creditor’s own claim, raise that separately and clearly. The Court treats genuine dispute and offsetting claim as distinct grounds. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
Act today and get the file reviewed
If your company has a real counterclaim, the next step is to test it against the 21-day clock, not against guesswork. Recheck the service date, finalise the maths, and make sure the affidavit matches the documents. A late or thin response can waste a defence that might otherwise matter. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))
If you want a practical review of the demand, the counterclaim and the affidavit material, call CRP today about legal intervention. CRP coordinates independent qualified professionals who can help you assess the paperwork and plan the next move. This is general information only, and the right response depends on the actual documents in front of you. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2003-07-01/2003-07-01/text/original/epub/OEBPS/document_2/document_2.html?utm_source=openai))